The Social Security Amendment (Training Incentives) Bill 2009 introduces two significant changes to the social security law arising out of the 2009-10 budget. These changes will encourage participation in study or training by job seekers with limited formal education and young people who are early school leavers.

Early school leaving is of particular concern when we look at how this affects the transition of young people into further education and employment.

When we compare the experience of working-age Australians without year 12 or a vocational qualification to people with these qualifications, we find that they are less likely to participate in the labour market and more likely to be unemployed. By age 24, only seven out of 10 young people without a year 12 or certificate III or IV qualification are in further training or employment. By contrast, nine out of 10 young people with such a qualification are in further training or employment. In other words, the lack of a qualification means a young person is almost three times as likely not to be in further training or employment.

There is also a demonstrated link between higher educational attainment and significantly better wages—around $100 a week for each extra year of education for full-time workers. Education clearly delivers better opportunities for individuals and for their families.

Early school leavers and people with low skills are likely to experience particular disadvantage during both the economic downturn and the recovery. In times of economic downturn, we know that youth unemployment tends to rise rapidly and then it falls back more slowly during the recovery. In the recession of the early 1990s, young people without year 12 were around three times more likely than their counterparts with year 12 to not be in further education and to be unemployed. In fact, around one in three early school leavers was unemployed.

This can result in youth unemployment remaining stubbornly high compared to the broader labour market.

We need to act decisively to prevent those with low formal qualifications or skills being left behind. This is why the Council of Australian Governments agreed that governments needed to work together, without delay, to improve young people’s connections to education and training.

The initiatives in this bill support the government’s commitment to improve the educational attainment level of Australians by encouraging completion of year 12, or its equivalent. They also support the government’s commitment to unemployed Australians to provide improved access to education and training opportunities.

The first component of the bill will give effect to the government’s $83.1 million investment in a training supplement for certain recipients of Newstart allowance and parenting payment. The supplement is for recipients who do not have year 12 or an equivalent qualification, or who have a trade or technical qualification that could be enhanced or upgraded. This measure will better equip recipients to find future employment.

Job seekers meeting these requirements will receive an extra $41.60 per fortnight if they undertake an approved training or further education course of less than 12 months duration at the certificate level II, III or IV level.

The training supplement will be available for people commencing this training between 1 July 2009 and 30 June 2011. This is a temporary measure to respond to the global recession. The training supplement will be available until any approved training commenced in this period is completed. It is estimated that over 50,000 low-skilled job seekers will be assisted over this period.

The second element of the bill will introduce changes to the participation requirements for youth allowance. This will support the action agreed by the Council of Australian Governments on 30 April 2009 to increase and improve young people’s participation in education and training.

All governments signed up to a Compact with Young Australians. This is a commitment to give young people aged up to 25 years an entitlement to an education or training place for any government subsidised qualification, subject to admission requirements and course availability. For 15 to 19 year olds, states and territories have agreed to fully implement this commitment by 1 July 2009.

Young people will access this education entitlement through schools, TAFE colleges or registered training organisations. In some cases, they may also be referred to do a course through the Productivity Places Program (PPP).

At the same time, COAG agreed to introduce a national youth participation requirement, to commence on 1 January 2010. Under the national youth participation requirement, it will be mandatory for young people to participate in school or an equivalent institution until they complete year 10. It will also be mandatory for young people who have completed year 10 to participate full-time (for 25 hours a week) in education, training or employment or combined activities until age 17.

Consistent with this, the Council of Australian Governments also agreed to bring forward the 90 per cent year 12 or equivalent education attainment rate target from 2020 to 2015.

To support these initiatives, the Commonwealth government committed to make education and training a precondition for young people without year 12 or the equivalent to obtain youth allowance (other) and family tax benefit part A. The Social Security Amendment (Training Incentives) Bill 2009 will give effect to this commitment for youth allowance. The changes to family tax benefit will proceed by way of separate legislation later in 2009.

The changes in this bill will apply to young people who do not have year 12 or an equivalent qualification. This is currently agreed by all jurisdictions to be a certificate level II qualification under the Australian Qualifications Framework.

To receive youth allowance, young people will need to ‘learn or earn’. If they have not completed year 12 or an equivalent qualification, they will need to either participate in education and training full time or participate full time (that is, generally for at least 25 hours a week) in part-time study or training in combination with other approved activities. They will need to do so until they attain year 12 or an equivalent certificate level II qualification.

The arrangements will be flexible for young people with complex needs. Young people with multiple barriers such as homelessness or substance abuse issues will have alternative ways in which to meet their participation and qualification requirements. Similarly, young people with a partial capacity to work or young parents will have their hours of participation tailored to their assessed capacity.

The present legislative exemptions that deal with any difficulties a young person may be having, for example alcohol or drug abuse issues or homelessness, will continue.

Also, young people or young parents with a partial capacity to undertake study or training will have their hours of participation tailored to their assessed capacity.

The amendments will apply to applicants for youth allowance from 1 July 2009. The new requirements will be progressively implemented for existing youth allowance recipients without year 12 or the equivalent between January and July 2010.

Past economic downturns have taught us that young people and others with limited education and skills are particularly vulnerable to becoming unemployed over the longer term.

The training incentives bill provides two much-needed measures to encourage people to continue to train and learn during periods of downturn so they are skilled for the recovery ahead.